Ashish Chaturmohta
Despite positive global cues market closed in the red for the fifth consecutive session on Monday, with the Nifty closing at 10,517 levels, down 80 points for the day.
The broader markets saw deeper cuts with BSE Midcap and Smallcap indices losing 1.64 percent and 2.2 percent, respectively. Market breadth was in favour of declines with a 1:4 advance-decline ratio on the NSE.
The Nifty has broken below its support level of 10,600 levels on the downside and formed another bearish candlestick for the day. Now, its next support is placed at 10,440-10,460 levels. Here the 50 percent retracement of the entire rise from 9,952 to 10,929 levels and 50-day moving average supports are seen.
In Nifty options, maximum open interest in puts is seen at the strike price of 10,500, suggesting support around 10,500-10,450 from where a bounceback may be expected.
In call options, a significant amount of open interest addition was seen in 10,600, followed by 10,700 and 10,650 levels.
Now the previous support level of 10,600 will act as immediate resistance for the market. Beyond that, any bounceback is likely to be capped at 10,670-10,700 levels.
Here is a list of top five stocks that could return up to 8-14 percent in the short-term:
Berger Paints: Buy | CMP: Rs 285 | Stop loss: Rs 272 | Target: Rs 325 | Return 14%
The stock has been consolidating at higher levels between Rs 285 and Rs 230 odd levels for the past one year. For the past couple of weeks, the stock has witnessed above average volumes and positive price movement indicating buying participation in the stock.
In the last one-month, the stock has formed higher lows indicating buying coming in at higher levels. Currently, the stock is trading around at its all-time high levels and generally post the breakout price continue to rally.
The relative strength index or the RSI has turned up after taking after support from its average. The Daily MACD has given a positive crossover with its average above the neutral level of zero suggesting the stock is likely to see a breakout on the upside.
Thus, traders can buy the stock at current level and on dips towards Rs 280 with a stop loss below Rs 272, and a target of Rs 325 levels.
Dabur India: Buy | CMP: Rs 373 | Stop loss: Rs 360 | Target: Rs 410 | Return 9.9%
The stock is in a long-term uptrend and has been forming higher tops and higher bottoms on the weekly chart. It witnessed a correction in late January to March this year from Rs 369 to Rs 312 levels.
The recovery from the low has been fast and the momentum took the stock to a new all-time high of Rs 383 this month.
Above average volumes at the bottom and subsequent bounce back indicates accumulation in the stock at lower levels. The stock has been trading in a range of Rs 383 and Rs 365 levels for the past three weeks consolidating its gains above its previous all-time high levels.
Thus, the stock can be bought at current level and on dips up to Rs 370 with a stop loss below Rs 360 for target of Rs 410 levels.
Persistent Systems: Buy| CMP: Rs 803 | Stop loss: Rs 760 | Target: Rs 910 | Return 13%
The stock touched a high of Rs 878 in the month of February and then declined to hit low of Rs 657 levels. The rally in the month of April has been good volumes indicating buying participation.
The price has retraced 61.8 percent Fibonacci of the whole decline and is now consolidating in a range of Rs 825 to Rs 760 odd levels for the last three weeks.
The stock has been finding support at its 21-day exponential moving average and has been holding above it which is a positive sign.
The weekly MACD has given a positive crossover with its average above neutral level of zero suggesting consolidation phase is over and the stock is likely to start an uptrend.
Thus, the stock can be bought at current levels and on dips up to Rs 790 with a stop loss below Rs 760 and a target of Rs 910 levels.
Ajanta Pharma: Sell | CMP: Rs 987 | Stop loss: Rs 1,030 | Target: Rs 900 | Return: 8.8%
The stock has formed a major bearish head and shoulders reversal pattern on its monthly chart. The price has witnessed a breakout on the downside from pattern. The volumes have been above average and price erosion in last three weeks indicating selling pressure in the stock.
Weekly ADX line has turned up after being flat for the last four months indicating strength in a downtrend. The weekly MACD too has moved below neutral level of zero indicating a resumption of the downtrend. Any bounce back is a shorting opportunity in the stock.
Thus, the stock can be sold at current levels and on the rise up to Rs 1,000 with a stop loss above Rs 1,030 for a target of Rs 900 levels.
Indiabulls Housing Finance: Sell | CMP: Rs 1,108 | Stop loss: Rs 1,150 | Target: Rs 1,010 | Return: 8.8%
The stock has formed a bearish head and shoulder reversal pattern on its weekly chart. Last week, the price witnessed a breakout from the pattern on the downside.
The price has also given a breakout from the Bollinger bands with the expansion of bands on the weekly chart suggesting the trend likely to continue on the downside.
The weekly MACD line has moved below the neutral level of zero suggesting further downtrend. Thus, the stock can be sold at current levels and on the rise up to Rs 1,120 with a stop loss above Rs 1,150 for a target of Rs 1,010 levels.
Disclaimer: The author is Head Technical and Derivatives, Sanctum Wealth Management. The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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